10/01/2012 01:52 EDT | Updated 10/01/2012 02:32 EDT

Canada-China Foreign Investment Promotion And Protection Agreement ‘A Corporate Rights Pact,' Council Of Canadians Says

Canadian Prime Minister Stephen Harper, left, shakes hands with Chinese Premier Wen Jiabao at the end of a signing ceremony held at the Great Hall of the People in Beijing Wednesday, Feb. 8, 2012. Harper was on a five-day trip to China. (AP Photo/Diego Azubel, Pool)

A China-Canada trade agreement the Harper government signed earlier this month amounts to a “corporate rights pact” that will make it harder for Canada to enforce environmental, energy and financial policies, the Council of Canadians says.

The left-leaning citizens’ group has issued a statement saying the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA) would lead to lawsuits against the government of Canada that would inevitably force it to weaken environmental protections, and urged the government to follow Australia’s lead and stop negotiating these types of deals.

The Council also said the pact would have little impact on trade with China.

There is very little evidence that these corporate rights pacts actually encourage investment into or out of Canada, or any other country for that matter,” Stuart Trew, a trade campaigner with the Council of Canadians, said in a statement.

“They are very useful, on the other hand, for extorting governments when things don’t go their way. That could be delays or cancellations to energy and mining projects, environmental policies that eat into profits, even financial rules designed to create stability or avoid crises can be challenged."

The council’s criticisms come shortly after Trade Minister Ed Fast and his Chinese counterpart signed the agreement, which came after some 18 years of stop-and-go negotiations that finally concluded last February.

It also comes as the federal government reviews the proposed $15.1-billion takeover of Alberta energy firm Nexen by CNOOC, China’s state-owned oil giant.

The Nexen-CNOOC deal appears to have the backing of the Harper government, but cabinet members have acknowledged Canadians are split on the issue.

CSIS, Canada’s intelligence service, has warned about deals with state-owned corporations, saying some of them could pose national security hazards.

The proposed takeover fuelled controversy last week when it emerged the company is developing a large offshore natural gas field in Iran and its chief executive has described CNOOC assets as a “strategic weapon.”

But the Harper government has been intent on expanding Canada’s trade relations with Asia, particularly China, in the wake of the weakening of the U.S. economy in recent years, and especially after the U.S. government’s temporary rejection of the Keystone XL pipeline last year.

The deal with China is designed to create a level playing field for Chinese companies operating in Canada, and vice versa, by eliminating barriers to foreign businesses in both countries.

The Harper government has said the deal will spur Chinese-Canadian trade by removing uncertainty for foreign investors.

But the Council argues the deal will simply be used to weaken Canadian regulations until they are more in line with what exists in China. It offers examples of other trade agreements that have had similar ramifications:

Chinese financial services firm Ping An, formerly the largest shareholder in Belgian-Dutch financial giant Fortis, has just taken Belgium to investor-state arbitration for the government’s post-financial crisis measures. Cigarette maker Philip Morris is using a Hong Kong-Australia investment treaty to challenge Australian plain packaging rules on cigarette boxes. Canada is the sixth most sued country under the investor-state dispute settlement regime, according to a recent UN Conference on Trade and Development report. Over the years, the federal government has paid out or is on the hook for more than $200 million in awards or settlements to corporations because of NAFTA investment lawsuits.

The Council is urging Canada to follow the example of Australian Prime Minister Julia Gillard, whose government has stopped negotiating what are known as “investor-state dispute resolution clauses” into its trade agreements.

“Canadians need a chance to review the risks in this treaty before it’s ratified by Parliament,” Maude Barlow, chair of the Council of Canadians, said in a statement. “This should not be a rush job, especially as Canada considers opening up its energy sector to Chinese investment.”

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